If you’re a sole trader (and most of us start out that way) a business bank account isn’t essential. It is a good idea to have a separate bank account for your business though, because it’s much easier to keep track of money going into and coming out of your business.
Most business bank accounts charge a monthly fee and that can be a shock after having a free personal account all your life but some offer free banking for the first year.
Some people starting small businesses use a personal bank account to avoid paying charges. If you do this and your bank finds out they probably won’t be happy about it and may ask you to switch to a business account.
When shopping around for business accounts, check which services you get with each account as they can vary from one bank to the next. If you need to be able to pay in cash and cheques at a local branch, make sure your account allows you to do so. Also check if a debit card is included. If you want to be able to go into a local branch and speak to a business banking specialist, you need to check that this is included in your account. It may be worth checking out the interest rate the bank pays you although this is very low for any bank account these days plus you can always transfer any money to a business savings account.
The reason some banks are able to offer free introductory deals is that they are web-based and don’t give you face-to-face access to a local bank manager. This is a trade-off that most mums running small home businesses are perfectly happy with, though. Plus you can always move accounts later if you want to.
Last update: 29/4/2013
Please note that the information in this post only applies if you live in the UK
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